A number of options were laid on the table at last Tuesday’s Denison City Council meeting with the goal to allow a larger operating margin for the Majestic Hills Golf Course.
Rollie Wiebers, president of the golf course board, presented a proposal that the city eliminate the rent and property tax payments on the cart storage area and the pro shop.
The golf course board also leases the Majestic Hills Bar and Grill, and Wiebers said the board understands that rent and property taxes must be paid on that entity because it competes with other businesses in the community.
The cart storage area, pro shop and restaurant and bar are all located on the lower level of the conference center building.
During the course of the discussion, other options were thrown out, including the city selling the conference center building to the golf course.
Wiebers offered that the city could buy the golf course, to which the council said no.
All the options will be examined further by a committee composed of Councilmen Corey Curnyn and David Loeschen, City Manager/City Engineer Terry Crawford, City Attorney Matt Brick and members of the golf course board. It was also recommended that Crawford County Assessor Duane Zenk be invited to the discussion.
The lease agreement between the golf course and the city began in 2005 when Boulders Conference Center was constructed. The lease agreement has been changed twice, and the city gave the golf course board a $5,000 rebate in December 2009 and again in December 2010.
Wiebers said that since 2005 the golf course board has operated a public golf course at no cost to the city; Carroll and Storm Lake, similar sized cities, have public golf courses operated the city, he added.
“Since 2005 we’ve held our own but it’s been extremely difficult,” said Wiebers. “The reason is the entertainment business is very competitive and due to the fact that we had to add nine holes and that we had to do some work with the conference center when it went in, we carry an awful lot of debt, and that debt stops us from moving forward like we want to.”
Wiebers said the golf course board is asking the city to partner more in running a public golf course.
He said the golf course brings business to the city and continued that new houses and condominiums were built around the second nine holes of the 18-hole golf course, which has helped the city’s tax base.
“I’m also here to tell you we’re at a critical point. We’re not sure we can continue to do what we’re doing at the level we’re doing it,” Wiebers said. “It’s just getting that tight. We’re looking for the city to be a partner and that’s why we have a proposal for the city to certainly consider.”
The beverage agreement with the conference center has resulted in the biggest change to the golf course income over the years, Wiebers added later.
“We estimate we’ve lost over $50,000 in revenue because the events upstairs (in the conference center) are down,” said Wiebers. “When you’re used to having that revenue to supply your product, that’s a big hit. We understand that’s a side business but yet that’s a big hit to us.”
He added the golf course board would like the city to address the beverage agreement with Boulders as well. The golf course pays 9.9 percent on the beverage revenue but if the conference center doesn’t make a certain amount of revenue, the golf course has to pay a minimum of $500.
“I believe we paid over $2,000 this year because they didn’t have a minimum of $500 revenue. That’s another kick,” said Wiebers.
Catherine Lechtenberg, manager of Boulders Conference Center, said the reason for the drop in beverage income is that the conference center is hosting more business events and fewer parties since the Stables at Copper Ridge opened up.
She added that with a 50 cent per drink disparity between the Majestic Hills Bar and Grill and the conference center, she’s seen people carrying trays of drinks from the restaurant up to the conference center.
During the discussion, Councilman John Granzen offered, “Actually, we’ll give you Boulders (Conference Center) and you can run the whole thing.”
“We would be open to looking at that to see if that’s a possibility because we want to do the best for the City of Denison,” Wiebers responded.
Wiebers offered another proposal if the city doesn’t like the one he brought. That would be for the city to buy the golf course.
“And then we’ll lease it back from you and continue to make the lease payments and tax payments,” he continued.
“No,” was Councilman Nathan Mahrt’s immediate response, and Curnyn said he would rather go in the other direction. He asked City Clerk Lisa Koch to talk to the city attorney about the potential of selling the conference center.
Curnyn said he could agree right away to the golf course board not paying lease and taxes on the cart storage area. He said the pro shop is still a for-profit business and should pay lease and taxes.
He added that the golf course should only pay the 9.9 percent on its beverage revenues and not the $500 when the conference center doesn’t meet its minimum beverage sales.
The council would like to have its subcommittee meeting with the golf course board in time to bring a report to the next council meeting on August 20.